The Obama administration and Congress are hurting the economy with financial reform and other economic programs, says Vito Fossella, chief operating officer of Superfund Investment Group.
These policy mistakes make the former New York Republican congressman bullish on gold, he told Newsmax.TV Money.
As for the financial reform bill, “it’s a monstrosity,” said Fossella, who represented New York's 13th Congressional district in the U.S. House of Representatives for 12 years, serving as the lone Republican from New York City.
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“Washington is saying it will solve the problem, but once again the bill will only exacerbate things and add to uncertainty, not unlike the healthcare bill,” he said.
A key omission from the finance bill was any effort to deal with the government-dependent mortgage agencies Fannie Mae and Freddie Mac, Fossella says.
“How do you have a 2,300 page bill to address the financial crisis that doesn’t address the need to change Fannie Mae and Freddie Mac?” he said.
The problem is Democrats don’t know what to do with the duo. “So you rearrange the deck chairs,” Fossella said.
“The bill adds tons of bureaucracy to an already bureaucratic system. It will add new responsibilities (for regulators) that will only cause more damage.”
Instead of the financial reform bill, “if we really want to generate economic growth, we have to figure out a way to get banks lending again to people who ultimately create jobs and keep our economy running,” said Fossella, of Superfund (www.superfund.com), an international consortium of investment companies specializing in trading and offering managed futures, with offices worldwide and managing investments in 120 global markets.
He opposes any more fiscal stimulus. The $787 billion package adopted by Congress last year clearly backfired, as unemployment remains at 9.5 percent, Fossella says.
“There are challenges facing all of us across the country,” he said. And Washington thinks it can solve everyone’s problems.
But, “the greatest stimulus package we have is 300 million Americans, who, if tax rates are lowered in a way that can put people to work and unneeded regulation is removed, will respond in kind,” Fossella said.
Citizens see their government as out of touch, he says.
“Washington feels it knows best, whether it’s the healthcare monstrosity, the financial reform monstrosity or another $1 trillion of economic stimulus,” Fossella said.
“It just doesn’t make any sense.”
All this helps to explain why Fossella remains bullish on gold. Fundamentals are strong for the precious metal, he says. The budget deficit and government debt burden are exploding.
“With monetary policy, it looks like the spigot continues to be open,” he said.
“Gold is the one asset that truly maintains its value when central banks print money like it’s going out of style. And there doesn’t seem to be an end in sight.”
While the U.S. is acting in a way that will hurt the dollar, “Gold has done well against major currencies across the globe, because smart investors know gold maintains value much better than fiat currencies.”
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